1. Moving the markets

An early bounce gave way to selling with the S&P 500 touching its hard fought 2,800 level, before bullish sentiment prevailed and pulled all 3 major indexes out of the doldrums and into a green close.

Nevertheless, it was a choppy session with support coming from the dangling trade carrot which, on many occasions, has successfully supported and bailed out the bulls. Today was no different in that reports announced that “new progress toward a trade deal” had been made based on “unprecedented proposals” to resolve the long-running dispute.

Keeping the rebound in check was the revision that the U.S. economy grew at a slower 2.2% in Q4 2018 vs. the initial 2.6% estimate. However, even with this adjustment, GDP for all of 2018 came in at 2.9% matching 2015 for best performance since the Great Recession 10 years ago.

With bond yields having been clobbered, the beneficiary turned out to be mortgage rates with the 30-year now down to 4.37% on average vs. 4.54% in 2018. On the other hand, housing numbers have shown anything but greatness in that sector with the latest victim being pending home sales, which tumbled 4.9% YoY, their 14^th straight month of declines.

We continue to be stuck in a sideways pattern, but I think we’ll see more clarity regarding the direction of the major trend once earnings season gets underway next week.

Read More

1. Moving the markets

While the major indexes opened in the green, the time spent above their respective unchanged lines was cut short, as sellers took charge and drove equities straight south supported by lower global growth expectations.

As luck would have it, things turned around mid-day, as we’ve seen many times before, and a slow but steady uphill climb began. In the end, the major indexes fell short of making up all losses but most of them were trimmed with the S&P 500 again reclaiming its 2,800 level.

Not helping equities were rising bond yields, which caused utilities to slide, while healthcare reversed its recent bullish move to sink for the session as well. Then German Semiconductor powerhouse Infineon AG, seemingly eroding confidence in the global economic view, slashed revenue growth outlook by a stunning 50%; not exactly awe inspiring.

Looking at the big picture, the Fed action and the recent weak data points, it should be clear that not all is well in the domestic economy, with recent wild market gyrations confirming this uncertainty. Upward momentum appears to have stalled, as the S&P 500 is engaged in a constant battle with its 2,800 level. Even though this marker has now been broken numerous times, it has rebuffed efforts to clearly climb above it and show some staying power.

It looks like the indexes are stuck and need a new driver to push prices above current levels. Otherwise, odds are pretty good that the next major move will be to the downside.

Read More

ETF Tracker StatSheet

https://theetfbully.com/2019/03/weekly-statsheet-for-the-etf-tracker-newsletter-updated-through-03-21-2019/

WEEK ENDS WITH REALITY CHECK

1. Moving the markets

Reality made its way into the stock market with the major indexes plunging at first then staging a mid-day comeback only to dump again and close at the lows of the session.

As I pointed out yesterday, the Fed’s extreme dovish stance, along with worries about plunging yields, made traders ponder “what do they know that we don’t?” It appears that the answer can be found in a global slowing economy along with deteriorating data points.

Europe started today’s carnage when Germany’s manufacturing PMI crashed to 44.7 from 47.6, while economists were expecting a modest rebound to 48. That is now the third consecutive reading below 50, which indicates not only contraction but a recession as well.

This was followed by the U.S. Manufacturing PMI plunging to a 21-month low of 52 from 53 against expectations of 53.5, while the services PMI came in at 54.8 from 56 vs. expectations of 55.5. Maybe traders are now less puzzled as to why the European Central Bank (ECB) displayed an extreme dovish stance, just a few days before the Fed followed suit.

This one-two punch caused yields to drop sharply with the widely followed 10-year bond closing down a whopping 9.3 basis points to 2.44%.

In fact, according to ZH, the yield curve is now inverted for the first time since 2007:

On six occasions over the past 50 years when the three-month yield exceeded that of the 10-year, economic recession invariably followed, commencing an average of 311 days after the initial signal.

While equity markets have been downright ignorant of this development, as well as the massive decoupling between stocks and bonds, today may have been a wake-up call. Well-known fund manager Jeff Gundlach had this to say:

“Just because things seem invincible doesn’t mean they are invincible. There is kryptonite everywhere. Yesterday’s move created more uncertainty.”

This makes it one more reason while it is critical for your financial well-being to have an exit strategy in place, despite the prevailing bullish sentiment.

Why?

Because, as we saw last October, market direction can unexpectedly change in no time, not only due to worldwide uncertainties but also because all bullish cycles will come to an end—eventually; and this one is way past its due date.

Read More